Question

D
Prepaid Expenses
15. Charles Ltd. earned a profit of 1,00,000 after charging depreciation of 20,000 on assets and a transfer
to General Reserve of 30,000. Goodwill amortised was * 7,000 and gain on sale of machinery was
3,000. Other information available is (changes in the value of Current Assets and Current Liabilities): trade
receivables showed an increase of 3,000; trade payables an increase of 6,000; Prepaid expenses an increase
of 200; and outstanding expenses a decrease of 2,000.
Ascertain Cash Flow from Operating Activities.
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Answer 1

Answer:

cash flow from operating profits

profit. 100000

+ depreciation 20000

+transfer to reserve. 30000

+amortization of goodwll 7000

-gain on sale of machine. 3000

profit before working capital changes

== 154000

-increase in trade receive le 3000

+ increase in trade pahale. 6000

-increasr in president express 200

-decrease in our standing expense 2000

== 154800